Market news wrap

Charlie Aitken from Bell Potter analyses a day that saw the Australian share market grounded.

Transcript

PHILLIP LASKER, PRESENTER: The Australian share market was grounded today.

Earlier I spoke to Charlie Aitken from Bell Potter.

Well Charlie Aitken, the market seemed to get hit from all sides today. Was it a carbon tax sell-off?

CHARLIE AITKEN, BELL POTTER: Yes, I'd say absolutely, Phillip. There was no doubt that the carbon tax played the biggest role in the ASX 200, losing 72 points today or three times what the Dow Jones industrial average fell on Friday night.

You can't blame US employment, you can't blame Chinese inflation, you can't blame Greek bonds. This was all about the carbon tax, all about uncertainty in Australia and all about earnings downgrades in Australia, and foreign investors just didn't like it and voted with their feet.

PHILLIP LASKER: Well, the steel makers seemed to be reasonably happy with the scheme. What happened to them on the share market?

CHAIRLE AITKEN: Well unfortunately they were happy, but their shareholders weren't. I mean, BlueScope shares down six per cent, OneSteel shares down 5.5 per cent. I mean, the steel stocks, to put this in context, had had a good run in the weeks leading up to the confirmation of the carbon tax and the steel industry slight exemption. But still the market didn't like it and marked the shares down sharply.

PHILLIP LASKER: And what about the renewable energy sector. How did that fare?

CHAIRLE AITKEN: Probably a predictable response there, Phillip, with Silex up seven per cent. They're involved in solar energy. Also Infogen, the big wind farm, up 5.5 per cent.

Remember, a lot of these stocks are coming off very, very low prices. A lot of them got hammered near the end of the financial year. Most of those stocks are a third of what they once used to be. So, more of a knee-jerk reaction in the green energy stocks.

PHILLIP LASKER: And did the impact spread to the retail sector, for example? Because on the one hand, households are going to get some relief from the carbon tax measures, but on the other hand, some people are saying, some retailers are saying it's going to hurt them.

CHAIRLE AITKEN: Yeah, it's interesting. A very mixed response from the retailers. The higher-end retailers like David Jones had a bad day, down 2.5 per cent, whereas the lower-end retailers who mainly service low-to-middle income earners who are the main beneficiaries of the tax offsets, etc., Myer and JB Hi-Fi, actually did quite well.

So, very specific in the retailers, but the ones that did well were more related to low and middle income earners.

PHILLIP LASKER: And, well, if we move away from the carbon tax, there's a fresh takeover bid in the resources sector. What do you make of the offer for uranium company Bannerman Resources?

CHAIRLE AITKEN: Well there was a little bit of green on the screens today, but Bannerman up 24 per cent. A bit of a strange offer, this one, Phillip, you know, a private Chinese company offering 61.5 cents with all sorts of conditions. The stock closed up at 48 cents, way below the bid price.

But, look, it probably shows there's some Chinese interest in uranium still post the Fukushima nuclear accident, but it didn't filter through to the bigger uranium stocks 'cause Paladin lost four per cent. So, a bit hard to work all that out today.

PHILLIP LASKER: And how did Wesfarmers fare after announcing lower prices for its coal sales?

CHAIRLE AITKEN: Well two bits of bad news for Wesfarmers today. Stock fell two per cent. There was insurance margins were a bit lower than expected and their insurance profit looks like it'll be a bit lower.

And also coal prices fell after the weather affecting Queensland from the floods eased a little bit. But they're still wonderful coking coal prices. But to be fair, anything with the word coal in it today was down because of, yep, the carbon tax.